The rate of return on common shareholders' equity shows
A) the amount of leverage the corporation employs.
B) the amount that each common shareholder would receive if the company were liquidated.
C) how many dollars of net income were earned for each dollar invested by the owners.
D) how the market value of the shares relates to the current earnings per share.

Question

Quizplus · Accepted Answer

The rate of return on common shareholders' equity indicates how many dollars of net income were earned for each dollar invested by the owners. It is a measure of profitability and efficiency in the use of shareholder equity. It does not provide information about leverage, liquidation value or stock market performance.

The Rate of Return on Common Shareholders' Equity Shows